The First Rebalance of the Diversified Staked Ethereum Index: A Significant Addition of Frax's sfrxETH Token
Today, we're excited to announce the first rebalance of the dsETH and the significant addition of Frax's sfrxETH token.
August 1, 2023
We're thrilled to bring you the latest update regarding the Index Coop's innovative product offering, the Diversified Staked Ethereum Index (dsETH). A key part of our mission is to make ETH staking more accessible and efficient for everyone, and the dsETH is a cornerstone of that vision. Today, we're excited to announce the first rebalance of the dsETH and the significant addition of Frax's sfrxETH token.
A Look Back: Understanding dsETH
The Diversified Staked Ethereum Index (dsETH) was conceptualized and developed with a simple yet powerful objective — to provide a diversified exposure to Ethereum's staking yield. It offers a streamlined way for holders to benefit from Ethereum's shift to Proof of Stake (PoS) without the need to maintain a validator or manage multiple tokens.
Frax's sfrxETH is now being added because it has now been in operation for at least six months, allowing the decentralized finance community to arrive at a consensus regarding its safety. Frax has also improved its consensus client diversity such that no one client exceeds two-thirds of client share.
On the other hand, Coinbase’s cbETH has not been included due to the noncompetitive fee of 25% of staking yield (versus 10-15% for other liquid staking protocols).
The First Rebalance: An Exciting Milestone
The time for the first rebalance has arrived. Rebalances are performed semi-annually or every 6 months. This is a crucial milestone showcasing the dsETH’s dynamism and its adaptability to the evolving LSTFi landscape. Rebalancing ensures that the dsETH remains optimally diversified to benefit holders and the Ethereum network and offers the best exposure to staked Ethereum's yield.
The index now includes: Rocket Pool's rETH, Lido's stETH, Stakewise's sETH2 and Frax's sfrxETH.
Addition of sfrxETH: Strengthening the Index
In this rebalance, we're thrilled to announce the addition of Frax's sfrxETH token. The Frax Protocol issues innovative, decentralized stablecoins and contains subprotocols to support them. Along with meeting our inclusion criteria (see image below), the sfrxETH token is a staking token representing a claim on staked Ethereum, backed by the stability and security of the Frax protocol.
The inclusion of sfrxETH in dsETH is expected to bring several benefits:
- Greater Yield: sfrxETH typically yields higher than other LSTs, contributing to higher potential returns for dsETH holders.
- Diversification: By including sfrxETH, we're increasing the diversity of staking methods within the dsETH, further mitigating risks.
- Alignment with Decentralization: Frax's protocol aligns with our commitment to decentralization, further emphasizing the core values of the Index Coop.
The Road Ahead
We're committed to continually evaluating and optimizing the dsETH composition to ensure it remains the best vehicle for diversified exposure to staked Ethereum yield. This first rebalance and adding sfrxETH is a testament to this commitment.
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